O-I Glass Inc (OI)
Interest coverage
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 392,000 | 849,000 | 1,031,000 | 1,132,000 | 1,000,000 | 1,038,000 | 879,000 | 754,000 | 532,000 | 466,000 | 718,000 | 452,000 | 601,000 | 696,000 | -195,000 | -14,000 | 28,000 | -65,000 | 620,000 | 606,000 |
| Interest expense (ttm) | US$ in thousands | 343,000 | 328,000 | 313,000 | 241,000 | 239,000 | 238,000 | 225,000 | 231,000 | 216,000 | 206,000 | 217,000 | 263,000 | 265,000 | 308,000 | 330,000 | 300,000 | 312,000 | 278,000 | 258,000 | 264,000 |
| Interest coverage | 1.14 | 2.59 | 3.29 | 4.70 | 4.18 | 4.36 | 3.91 | 3.26 | 2.46 | 2.26 | 3.31 | 1.72 | 2.27 | 2.26 | -0.59 | -0.05 | 0.09 | -0.23 | 2.40 | 2.30 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $392,000K ÷ $343,000K
= 1.14
Interest coverage measures a company's ability to pay its interest expenses on outstanding debt. A higher interest coverage ratio indicates a company is more capable of meeting its interest obligations. Looking at O-I Glass Inc's interest coverage over the past few quarters, there is some fluctuation.
In the latest quarter of December 31, 2023, the interest coverage ratio was 1.14, indicating that the company's earnings before interest and taxes was just sufficient to cover its interest expense. This ratio has decreased from the previous quarter, where the coverage ratio was 2.59, suggesting a decline in the company's ability to cover its interest payments.
In contrast, the interest coverage ratio was significantly higher in the earlier quarters of 2023, with values of 3.29 and 4.70 in June 30, 2023, and March 31, 2023, respectively, indicating a stronger ability to meet interest obligations. However, looking back over the past few years, there seems to be some inconsistency in the company's interest coverage, with some quarters showing negative ratios, such as in March 31, 2020, and June 30, 2020, which may raise concerns about the company's financial health.
Overall, the trend in O-I Glass Inc's interest coverage ratio has been inconsistent, with fluctuations quarter to quarter. It will be important to monitor this ratio closely in the future to assess the company's ability to meet its interest obligations and manage its debt effectively.